The procurement optimization cycle as an approach to the holistic optimization of the purchasing organization

Purchasing organization

Mission / Vision / Strategy

Procurement optimization cycle

Cost-saving potential

Strategic organization

Measures

The role of purchasing is often considered a burdensome part of entrepreneurial activity. Its importance is often underestimated in many companies and therefore optimization is often neglected in this area. However, purchasing represents a company-wide process of the value chain and considerable volumes of money are moved by it. From the purchase of waste disposal services to janitorial services, from office supplies to small and large technical equipment, there are no limits to the range of purchasing in relation to goods and services. Large amounts of money moved by purchase processes get unnecessarily lost due to poor strategic positioning and inefficient operational execution. Nowadays, purchasing no longer solely serves the production process, but increasingly fulfils strategic tasks and has become a complex issue.

A number of optimization approaches have already been described and successfully implemented in the real economy. The most suitable approach must be identified based on the specific company's needs and characteristics. Emphasis shall be placed on the holistic approach. All facets of purchasing must be analysed and optimized as an overall framework. Observing only the individual parts of the value chain indeed leads to a short-term improvement in the financial situation. However, sustainable secureness of the company's cash flow cannot be achieved. Since the latter must be the goal of every company, optimization should focus on this area.